The issue already examined and adjudicated by the quasi-judicial authority, i.e., CIT(Appeals), cannot be reopened on the same set of facts – High Court
In a recent judgment, Hon’ble High Court has held that when the very issue was already been examined and adjudicated by the quasi-judicial authority, i.e., the Commissioner of Income Tax (Appeals), it cannot be reopened on the same set of facts.
ABCAUS Case Law Citation:
5219 (2026) (08) abacus.in HC
In the instant case, the Petitioner/assessee had challenged notice issued under Section 148 of Income Tax Act, 1961 (the Act), sanction note and all other consequential proceedings/actions.
The Petitioner was a HUF which had filed a return with refund claim. In the return of income, the Petitioner under the head “Business Income” had disclosed interest income after netting off corresponding interest expenditure.
The Centralized Processing Center (CPC), processed the return vide intimation u/s 143(1), restricted the part TDS credit citing mismatch of income with Form 26AS.
Petitioner filed a rectification application under Section 154 explaining that the entire corresponding net interest income was duly reflected under business income and under “Income from Other Sources.” However, the CPC rejected the rectification application.
The CIT(A) allowed the appeal, accepting the Petitioner’s reconciliation of interest income, and directed grant of full TDS credit after verification with Form 26AS, along with consequential relief. Thus, the findings of the CIT(A) adjudicated the issue of alleged mismatch and treatment of interest income.
However, a fresh notice under Section 148 was issued to the Petitioner based on a sanction, seeking to reopen the assessment on the ground of alleged escapement of income based on the same discrepancy flagged earlier on the Insight Portal.
The Hon’ble High Court observed that the CIT(A), upon due examination of the same material on record, as noted in the sanction note, ibid, adjudicated the matter on merits. Since then no fresh material or new information had come into the possession of the Assessing Officer that can possibly justify reopening the assessment on the ground of alleged escapement of income. Therefore, issuance of the impugned show cause notice in the present case was, at best, one of a mere change of opinion by an assessing officer, which does not constitute a valid ground for reassessment.
The Hon’ble High Court further observed that the contents of the sanction note leading to issuance of the fresh notice for reassessment, when read in conjunction with and compared against the order passed by the CIT(Appeals), only revealed a change of opinion on the part of the Assessing Officer with respect to facts and materials that had already been examined and conclusively adjudicated by a competent appellate authority.
The Hon’ble High Court noted that on the question of disclosure, the CIT(A) had noted that the assessee had not suppressed any income. Full Interest income was recorded in the business accounts after netting against interest expenditure, and a further amount was declared under income from other sources. The totality of interest income was thus offered to tax, albeit across different heads, a fact the AO (CPC) failed to appreciate before mechanically restricting the TDS credit.
The Hon’ble High Court noted that the sanction note proceeded on the premise that interest income from deposits remained unexplained and had escaped assessment. However, the CIT(A)’s order, which had attained finality, not having been challenged by the Revenue, conclusively established that the income was duly disclosed and the denial of TDS credit was erroneous.
The Hon’ble High Court observed that it is a firmly settled position of law that the power of reassessment conferred under Section 147 of the Income Tax Act, 1961 cannot be exercised merely on the basis of a change of opinion by the Assessing Officer with respect to facts and materials that were already available on record at the time of the original assessment.
The Hon’ble High Court further noted that Hon’ble Supreme Court authoritatively settled that although the Finance Act, 1989 omitted the requirement of “reason to believe” based on “new tangible material”, the concept of “change of opinion” as a bar to reassessment continues to operate as an in-built check against arbitrary exercise of the power. It was held therein that the Assessing Officer must have tangible material to conclude that income has escaped assessment and that mere re-examination of the same facts cannot justify reopening.
The Hon’ble High Court observed that the above principle laid down by the Hon’ble Supreme Court had also been consistently affirmed by various High Courts including Delhi High Court and Gujarat High Court
The Hon’ble High Court opined that the reassessment notice was therefore nothing but a re-examination of a concluded matter, squarely falling within the prohibited category of a change of opinion. Therefore, notice was held to be without jurisdiction and liable to be quashed.
The Hon’ble High Court opined that opinion that the appellate order having attained finality, the subsequent notice issued under Section 148 of the Act for reopening the assessment, on the basis of same facts and material, is clearly beyond the jurisdiction of the Assessing Officer and constitutes an overreach of authority. The very issue having already been examined and adjudicated by the quasi-judicial authority, i.e., the Commissioner of Income Tax (Appeals), and therefore the same cannot be reopened on the same set of facts. The action of the Assessing Officer in seeking to revisit the concluded matter amounted to exceeding his authority and reflects an improper exercise of power.
Accordingly, the Hon’ble High Court allowed the writ petition and both the notice issued under Section 148 and sanction note and all other consequential proceedings arising therefrom were set aside.
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